Jack the Pipper

Why is this important? Because all the talk of a “bond bubble” is predicated on inflation … if it doesn’t materialize, there is no bond bubble. In fact, we do not think there is a bond bubble.

We yesterday received an email from someone responding to our general perspective on China. While the email addressed most of the factors we already recognized, it did so with a different spin – one that is much more supportive of China and much more fearsome of the future of the US.

Adopting an austerity budget in Ireland — that was the reason for the see-sawing euro yesterday.

In the US we all understand that our esteemed politicians and mega-CEOs love being flattered. And boy have they been soaking up the glory from their decisions to send large chunks of business operations to China over the last 10 years or so.

A couple of weeks ago we laid out the case for a major top being in place in the Australian dollar. Could we be very wrong? You bet. And the reason would be stock markets blow-off again on a doubling-down of QE2 and continued optimism China will keep the music playing. A plausible bet indeed! But…

“Close your eyes and tap your heels together three times. And think to yourself, there’s no place like home.”

JR here … when I read over Jack’s line yesterday about “wine-sipping and croissant eating” it made me wonder if I am, in fact, a “big-government socialist.” It also made me think of McDonald’s disgustingly delicious bacon, egg and cheese croissant-wich.

We have been saying for years now that Germany is sucking the wind out of Europe. But, then again that should be a surprise to exactly no one who ever bothered to consider the initial structure of the so-called common monetary union. It wasn’t so common and it sure wasn’t structured for a lasting union.

It’s resurfacing. Perhaps not in the exact same places or at the exact same frequency or with the exact same magnitude, but things are resurfacing.

The markets are a bit shaken up – the Korean won is down more than 3%; the US dollar is the recipient of some safe-haven flow; the S&P 500 futures are down about 1% at writing.